What's Behind Microsoft Shift? Marketing 'Chaos'

Yanks Bing, Windows from JWT Amid CMO Transition, More Account Moves in the Offing

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There's an oft-reliable rule of thumb in adland that dictates watching for a change in ad-agency relationships three to six months after a company has installed a new chief marketing officer.

But when Microsoft yanked the Bing and Office accounts from JWT barely three weeks into new Chief Marketing Officer Chris Capossela's tenure -- and while longtime CMO Mich Mathews is transitioning her way out -- the speed of the shift prompted questions about what was behind the move, coming at critical time for the tech giant's consumer-marketing initiatives.

Mich Mathews is transitioning out of Microsoft.
Mich Mathews is transitioning out of Microsoft.

Microsoft last week was mum on the reason for the agency changes, which JWT CEO Bob Jeffrey decried as unfair and anger-inducing. And more are said to be on the way, particularly relating to Windows Mobile, which is handled by CPB. "Microsoft works with a number of agencies on a variety of projects," said a spokeswoman in a statement. "Beyond that , we have nothing further to share. We're not commenting on mobile at this time."

The roster shakeup is worrying to Microsoft's other agencies, who now fear their relationships are also on the line. But the bigger concern is that the shifts are coupled with a lack of consumer-marketing experience atop the corporate-marketing division at a time of challenges, from Microsoft's failure to answer the iPad to its inability to create buzz for a mobile operating system that trails Apple, Google and RIM.

Like Ms. Mathews, Mr. Capossela is a Microsoft lifer. The onetime speech assistant to Bill Gates was previously responsible for marketing business-to-business products such as Microsoft Office and Visio. While he's said to be shifting into the CMO role, Ms. Mathews is technically still at the company and won't be leaving until summer.

A top exec at one of Microsoft's agencies described the marketing suite as in a state of "chaos" right now.

Said a person within the company: "These are big jobs at really important times for Microsoft and you have a business-marketing guy running consumer marketing at a time when Google and Apple are kicking our asses."

(Several people whom Ad Age spoke to noted there's a similar transition atop the ad-sales division, as Frank Holland, a longtime supply-chain executive, was last month named corporate VP-advertising and online business. Mr. Holland is a virtual unknown in the advertising and marketing world.)

While JWT was fired from the Bing account, the numbers suggest its advertising for the search engine, which it handled since May 2009, has been successful. Since then, Microsoft's share of search has shot up from 8% of the overall market to 14%, according to ComScore, and it appears to be taking share from Yahoo and AOL.

The Bing move came just weeks before former JWT chief creative Ty Montague's noncompete contract is set to run out and many suspected that the business, or at least a portion of it, would head to Co Collective, the shop that Mr. Montague and former North American Rosemarie Ryan founded last year. The pair were critical in JWT's winning the business before they left to launch their own venture a year ago. But despite earlier ties to Microsoft and a recent hiring spree, Ms. Ryan insisted to Ad Age that rumors Bing work would land at Co's door were simply not true. For its part, Microsoft said it has appointed Interpublic Group of Cos.' Deutsch to take on the Office work, while CPB will create the next wave of Bing work.

The losses of Bing -- valued at $116 billion alone--and Office reduce JWT's status on Microsoft's roster from one of the largest to one of the smallest, with just a couple of bits of business in China and Brazil, and will likely lead to layoffs. The agency declined to comment on how many staff could be affected.

When Ad Age asked who JWT believes was behind its dismissal, Jeremy Postaer, the JWT executive creative director on the Bing work, said: "That's like asking who's the guy that shot Osama. ... Who really knows?"

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